Question

The amounts of the assets and liabilities of Nordic Travel Agency at December 31, 2016, the end of the year, and its revenue and expenses for the year follow. During the year, Ian withdrew $37,000.

Accounts	Amounts
	At Jan. 1, 2016:
Ian Eisele, capital	$645,000
	At Dec. 31, 2016:
Accounts payable	$73,000
Accounts receivable	277,000
Cash	191,500
Fees earned	918,700
Land	547,000
Miscellaneous expense	6,000
Rent expense	34,000
Supplies	6,000
Supplies expense	4,200
Utilities expense	29,000
Wages expense	505,000

	Required:
1.	Prepare an income statement for the year ended December 31, 2016.*
2.	Prepare a statement of owner’s equity for the year ended December 31, 2016.*
3.	Prepare a balance sheet as of December 31, 2016.*
4.	What item appears on both the statement of owner’s equity and the balance sheet? * Refer to the information given and the lists of Accounts, Labels, and Amount Descriptions provided for the exact wording of the answer choices for text entries. Be sure to complete the statement heading. If a net loss is incurred or there is a decrease in owner’s equity, enter that amount as a negative number using a minus sign.

Answer 1

• All working forms part of the answer
• Requirement 1: Income Statement

Revenues:
Fees earned	$                 9,18,700.00
Expenses:
Miscellaneous expense	$                       6,000.00
Rent expense	$                     34,000.00
Supplies	$                       6,000.00
Supplies expense	$                       4,200.00
Utilities expense	$                     29,000.00
Wages expense	$                 5,05,000.00
Total expenses	$                 5,84,200.00
Net Income	$                3,34,500.00

• Requirement 2: Statement of Owner’s Equity

Beginning Balance Jan 1 ,2016	$                 6,45,000.00
Add: Net Income 2016	$                 3,34,500.00
	$                 9,79,500.00
Less: Drawings during 2016	$                     37,000.00
Ending Balance 31 Dec 2016	$                 9,42,500.00

• Requirement 3: Balance Sheet

Assets:
Current Assets:
Accounts receivable	$               2,77,000.00
Cash	$               1,91,500.00	$                            4,68,500.00
PPE:
Land		$                            5,47,000.00
Total ASSETS		$                          10,15,500.00
Liabilities & Equity
Liabilities:
Accounts payable		$                                73,000.00
Owner's Equity		$                            9,42,500.00
Total Liabilities & Equity		$                          10,15,500.00

* Requirement 4

The item that appears on both 'Statement of Owner's Equity' and 'Balance Sheet' is the Ending Capital Balance of $ 942,500